A Company Incurs $1,200,000 of Overhead Each Year in Three

question 59

Multiple Choice

A company incurs $1,200,000 of overhead each year in three departments, Processing, Packaging, and Testing.The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of oil and 600,000 drums of sludge.The following data are available: $$\begin{array} { l c r } \text { Department } & \text { Expected use of Driver } & \text { Cost } \\\hline \text { Processing } & 800 & \$ 500,000 \\\text { Packaging } & 200,000 & 500,000 \\\text { Testing } & 2,000 & 200,000\end{array}$$ Production information for oil is as follows: $$\begin{array} { l c } \text { Department } & \text { Expected use of Driver } \\\hline \text { Processing } & 300 \\\text { Packaging } & 120,000 \\\text { Testing } & 1,600\end{array}$$ Calculate the amount of overhead assigned to oil.

• A)$600,000
• B)$647,500
• C)$552,500
• D)$460,000

Understand the priority rules for security interests and their application in various scenarios.

Understand the rights and obligations of secured parties and debtors concerning repossession, sale, and disposition of collateral.

Differentiate between types of collateral and their specific handling under the UCC.

Grasp the legal consequences for parties involved in secured transactions when regulations are not properly followed.

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Definitions:

Standard Cost System

An accounting method that uses predetermined costs for product costing and decision-making purposes.

Standard Labor-Hours

The estimated amount of time that should be required to complete a task or produce a unit of goods.

Predetermined Overhead Rate

An estimated rate used to allocate overhead costs to products or job orders, based on expected costs and activity levels.

Variable Manufacturing Overhead

Costs that fluctuate with the level of production, such as utilities or indirect materials, but are still related to the manufacturing process.